Puerto Rico's Senate approved a measure on Tuesday that would allow the governor to declare a fiscal emergency and place a moratorium on debt payments amid a worsening economic crisis.

Senators said the measure would ensure the continuation of essential government services as the U.S. territory runs out of money. It also would create a path to place the troubled Government Development Bank into receivership if needed.

"Puerto Rico is in need of immediate relief," the measure states. It "needs tools to exercise its police powers in order to protect the health, safety and welfare of the people of Puerto Rico."

If approved, the bill would allow the governor to impose a moratorium until January 2017. It also calls for the creation of a financial advisory authority that would oversee fiscal issues.

The bill comes as Puerto Rico urges U.S. Congress to approve a restructuring mechanism to deal with a $70 billion public debt load that the governor has said is unpayable.

The bill states that Puerto Rico may default on $400 million worth of bonds issued by the bank due in May and on another $780 million due in July. It noted that the bank, which issues loans and oversees the island's debt transactions, only has $562 million in liquidity. The bank already faces its first lawsuit filed on Monday by a group of hedge funds seeking in part to stop the bank from forgiving debt.

Government officials said they are still in negotiations with creditors, who have rejected the proposed bill and warned it would lead to numerous lawsuits.

Legislators who oppose the bill echoed that concern.

"It's evident that if they approve a unilateral moratorium ... it will provoke an avalanche of lawsuits," said Rep. Jose Enrique Melendez.

The island's House of Representatives is scheduled to debate the bill on Tuesday, and the governor is expected to sign it into law if approved.

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Danica Coto on Twitter: www.twitter.com/danicacoto